Treasury Committee repeats call for law on fraudulent online ads
An influential group of MPs has said that the Government must address fraudulent advertising for investment products in the upcoming Online Safety Bill.
Mel Stride, who chairs the Treasury Select Committee, said the Treasury and the Financial Conduct Authority (FCA) are engaging with most of the committee’s recommendations that came in the wake of a major investment scandal.
But it is yet to see what ministers will do to stop investment companies issuing fraudulent ads online, many of which have in the past appeared at the top of search results for people looking where to put their money.
Failed investment scheme London Capital and Finance trapped around £237 million worth of money belonging to 11,000 small investors when it collapsed in 2019.
The failure led to a public inquiry, and the taxpayer is set to spend around £120 million to reimburse the investors.
Many of the investors found the scheme through online adverts.
The Treasury Committee had recommended that fraudulent ads should be banned in the upcoming Online Safety Bill.
The ban on ads won backing from the FCA, according to a response released on Monday.
The FCA has already convinced Google to voluntarily check that advertisers are regulated by the watchdog before allowing the ads.
The Treasury said that “the Government is considering tougher regulation of online advertising, including regulations designed to tackle fraud online”.
However Mr Stride said: “The collapse of London Capital and Finance severely impacted many investors and highlighted considerable regulatory failings.
“It is therefore pleasing to see the Treasury and the FCA engaging positively with our recommendations.
“However, as our report highlights, it is not yet clear whether the Government will include fraudulent advertisements within the scope of the Online Safety Bill.
“To prevent fraud in the future, this is an issue which must be addressed.
“We will continue to follow the FCA’s implementation of our recommendations and their transformation programme closely.”